Festive spirit may light up auto sales

Picture source: ThinkStockAutomakers are preparing for bumper festival sales, as they see consumer sentiment and rural demand firming up ahead of Dussehra and Diwali.

Maruti Suzuki, the local leader in the passenger vehicle market, on Saturday reported a more than 29% rise in September dispatches, as it stocked up dealerships with the Baleno, Vitara Brezza and other models to meet festival demand. Other carmakers like Hyundai Motor, Toyota Motor, Ford Motor and Honda Motor, as well as two-wheeler makers such as Hero MotoCorp and Honda Scooter &Motorcycle are also expecting strong sales.

“The industry should see good demand during the festivals this year. The turnaround has taken place in rural markets and the momentum is expected to improve over the coming months once harvest takes place,” said RS Kalsi, executive director for sales and marketing at Maruti Suzuki.

Demand is good in cities as well, in part due to the salary hike announced for government staff, he added. Industry executives are confident of exceeding last year’s performance.

Passenger vehicle sales rose 21% to about 2,68,000 units in October last year. The key festivals of Dussehra and Diwali were spread over October and November, unlike this time when both are in October.

While everyone is bullish on festival demand, there are some concerns about the long list of holidays hurting production in October.

“Festive season will be good this year. But wholesale growth should be read for September and October together as stocks have been built at dealerships over the last one month. Besides, there are several holidays with Dussehra and Diwali all falling in October this year, which may pose challenges in production,” said N Raja, director for sales and marketing at Toyota Kirloskar Motor.

Automakers in India report wholesales numbers, or the dispatches from factories, on a monthly basis, but not their retail sales. That means a part of the festival demand that they are expecting at the retail level this month has already been accounted for in the September wholesale numbers that they reported in the past two days.

COS OPTIMISTICKorean automaker Hyundai is expecting a 25% increase in India sales this festival months, as Rakesh Srivastava, the India head for sales and marketing, cited monsoon rains “that have been evenly spread which bettered sentiments in rural markets” and the salary hike that has “put more money in the hands of government employees” as the key reasons for the optimism.

To tap into the potential, Hyundai recently introduced the new Elantra and will beef up the portfolio with the Tucson SUV this month.

Maruti Suzuki’s Kalsi is predicting the sales momentum to continue beyond the festivals. Sales have grown 12.1% in the first six months of the fiscal year (April-September) and the company remains committed to posting double-digit growth for the entire year, he added.

Anurag Mehrotra, executive director of marketing, sales & service at Ford India, said the festive period “has started on a promising note for the industry”.

Honda Cars India, which has struggled to grow volumes over the past year due to a shift in consumer preferences towards petrol vehicles, expects better sales going ahead, said CEO Yoichiro Ueno.

In the two-wheeler space, manufacturers expect the growth momentum to continue. Ashok Bhasin, head of sales, marketing and customer care at Hero MotoCorp, said the company has seen a good start to the season with the Onam in Kerala.

“There are green shoots in rural markets. This is based on sentiment right now, but once the harvest is in, there should be strong demand over the next few months.”

Hero MotoCorp launched three new motorcycles leading up to the festive season. It has also launched the 'Khushiyan har Aangan' initiative to reach out to opinion leaders in villages and boost rural sales.

YS Guleria, senior vice president of sales and marketing at Honda Motorcycle & Scooter India, recently told ET he expects 20% growth between August and November in two-wheeler sales.